Contract Assignment

Topics: Misrepresentation, Contract, Contract law Pages: 11 (4435 words) Published: March 29, 2015
The issue here is whether the purchase agreement entered by Mr. Cheong Fatt and Maniam is voidable by virtue of Sec. 17(b)? In order for a contract to be executed properly, it must be done in favour of Sec. 10, 13 and 14. Sec. 10 prescribes that an agreement in a contract if it done with the free consent of parties for a lawful consideration and with a lawful object. The word “consent” here is defined based on Sec. 13 where two or more parties agreed in the same sense and for an agreement to be a contract, the consent is off to be a “free consent”. A “free consent” is said to be free if it is not caused by five matters which are coercion(Sec.15), undue influence(Sec.16), fraud(Sec.17), misrepresentation(Sec.18) or mistake; subject to Sec.21, 22 and 23. If the contract is off from any of the five prescribed manner, it is held to be a free consent. The principle of fraud is stated based on Sec. 17 of the Contracts Act 1950 which clarifies the act done by a party with the intention to deceive another party or to induce him to enter into a contract. A contract must be made with free consent as stated in the Explanation in Sec.19.A form of fraud may cause the contract to be voidable. As in the case of Kheng Chwee Lian v Wong Tak Thong [1983] 2 MLJ 322, the respondent bought a half share in a piece of land from the appellant from the appellant and paid the purchase price. However, it was required for the respondent to induce into another contract which he was allocated a smaller portion of land than in the earlier agreement. The respondent alleged that he was induced by the false representation of the respondent to sign the second agreement. He then applied to the court in order to obtain a declaration he was the owner of one half of the land and an order for the land to be subdivided. Portions of the land had been transferred to the sons of the appellant. However, the sons were not parties to the action. The trial judge found that the respondent had been misled into signing the second agreement and was not aware that pursuant to it. The Federal Court agreed with the trial judge’s finding that the respondent was induced after all by the misrepresentation into signing the second agreement and held that the misrepresentation was fraudulent within the meaning of Sec. 17(a) and (d) of the Contracts Act. It was voidable by virtue of Sec. 19. Proceeding to Sec. 17(b), a contract is to be considered as fraudulent if it involves with an active concealment of a fact by one having knowledge of belief of the fact. An active concealment here refers to situation where a party conceals any information which they have a duty to disclose. The concealment may occur through actions, writings, or spoken words. This is more than simply a failure to disclose private information- active concealment involves a positive act intended to conceal the information. Under Sec. 17(b) of the Contracts Act, there must be an active concealment of a fact and the concealment was made by a person who has knowledge of it. In the case of Tay Tho Bok & Anor v Segar Oil Palm Estate Sdn. Bhd, the plaintiff entered into an agreement to purchase 11 pieces of land but after paying the deposit and signing the agreement, the plaintiff found that part of the land was being used by the Public Utilities Board for water pipelines and Tenaga Nasional Bhd for transmission cables. The plaintiff argued for the purchase price to be reduced to reflect the presence of these encumbrances. The defendant however stated that they had no knowledge of any land acquisition. The High Court held that the acts of defendant amounted to fraud within the meaning og Sec. 17. It was found that the defendant knew the condition of the land prior to the purchase agreement. It was found that there is an active concealment as the defendant’s agents had informed the plaintiff and those structures were not within the land. There are other several elements in order to prove there is an existence of fraud in...
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